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U.S. Senator John Cornyn (R-Tex.) is siding with IT staffing firms that rely heavily on H-1B visa workers in a fight over a new immigration rule that curbs their ability to hire foreign workers.

These staffing firms, which may have more than half of their employees on H-1B visas, have been complaining about a U.S. Citizenship and Immigration Service (USCIS) memo written last year by Donald Neufeld, an associate director of the agency, that upended their business model.

The IT staffing companies have long made H-1B workers available to third-party employers for short and long-term projects.

The Neufeld memo, however, requires staffing firms to maintain day-to-day control of H-1B workers at third party sites to remain eligible to hire a visa holding employee. But day-to-day control typically belongs to the third party using the worker and not the staffing firm.

In a letter to Alejandro Mayorkas, the USCIS director, Cornyn said IT staffing firms "provide a valuable, short-term solution to their clients, some of whom are federal and state agencies, hospitals, insurance providers, and entities that deal in financial services."

Cornyn said TechServe represents 350 IT consulting and staffing companies, 40 of which are based in Texas. Cornyn accused the agency of overstepping its authority in the Neufeld memo.

The USCIS "should not create a new policy that essentially denies the entire IT consulting and staffing industry access to H-1B workers," said Cornyn.

"Without H-1B workers, many companies who are part of the multi-billion dollar IT industry will either move offshore or simply go out of business - both of which will have a significant impact on the U.S. workforce," wrote Cornyn.

A USCIS spokesman said the agency has received the letter, is looking into it, and plans to respond to the senator. Cornyn is the ranking member of the U.S. Senate Judiciary Subcommittee on Immigration, Refugees and Border Security.

The Neufeld memo was cited by the USCIS as one of the responses it made to a study that revealed a fraud rate in H-1B petitions of more than 13 percent and more than 7 percent with technical violations. "Violations ranged from document fraud to deliberate misstatements regarding job locations, wages paid, and duties performed," Neufeld said in testimony in March on the H-1B visa before House Subcommittee on Immigration Policy and Enforcement.

Cornyn asked Mayorkas to meet with the TechServe Alliance "to hear their concerns about the Neufeld memo and its impact on legitimate IT businesses."

The TechServe Alliance, which represents services firms, last year filed a lawsuit on behalf of several of its members potentially hurt by the new rule. Among them, for instance, was Logic Planet, which, at the time, employed 95 IT workers, including 89 on H-1B visas.

Mark Roberts, the CEO of TechServe, said he was pleased with Cornyn's effort. "We're looking forward to getting the attention of the agency," he said.

Roberts said USCIS policy is having an impact on the ability of staffing firms to get an H-1B visa. "It has chilled the process and created uncertainty," he said.

Roberts also believes that it may be impacting demand of the H-1B visa. Since the start of the visa filing period for the 2012 fiscal year, which begins Oct. 1, the USCIS has received 28,700 H-1B petitions out of the 85,000 available, or about one third of the total.

Of the total cap, 20,000 are set for people who have earned advanced degrees at U.S. universities.

Roberts said that since the U.S. began accepting petitions for the next fiscal year, "virtually no" staffing company has filed for an H-1B petition. "I think demand is being depressed," he said.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His email address is pthibodeau@computerworld.com.